Rules Tighten on Government Backed Cash-Out Refinancing; Rates Are Actually Lower Today!
The Department of Housing and Urban Development (HUD) is reducing the amount of equity that can be withdrawn from a home using either a Federal Housing Administration (FHA) or a Veterans Administration cash-out refinance. The new rules will limit the loan-to-value (LTV) ratio of FHA loans to 80 percent and VA loans to 90 percent. The FHA LTV limit for cash-out refinances is currently 85 percent. That change will apply to loans with case numbers assigned on or after September 1. The memorandum from HUD announcing the reduction says the department is taking action "to mitigate risks to the FHA Insurance Fund associated with increasing levels of insured loan balances on cash-out refinance mortgages. This new requirement is a prudent safeguard that permits FHA to ensure it stays ahead of any shift
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